On September 10, 2026, the U.S. Attorney’s Office (USAO) for the Northern District of California announced that Southern Glazer’s Wine and Spirits, LLC (Southern Glazer’s), the largest distributor of wine and spirits in the United States, entered into a non-prosecution agreement (NPA) to resolve a federal criminal investigation into the company’s bribery, false invoicing, and other trade practice violations. Under the terms of the agreement, Southern Glazer’s will pay $12.5 million to the U.S. Treasury, enhance its compliance measures, and continue to cooperate with the federal government during the pendency of any criminal prosecution related to this matter. This is one of the most significant federal enforcement actions against an alcohol distributor in recent years and carries important implications for industry members and third-party vendors.

Background: The Conduct at Issue

Southern Glazer’s is a national alcohol distributor headquartered in Florida, operating in 46 states and the District of Columbia and employing more than 24,000 people. The federal investigation centered on two categories of conduct: (1) improper payments and things of value to employees of alcohol retailers related to the purchase, maintenance, and placement of products; and (2) the use of third-party vendors and false invoices to conceal the company’s practices.

The Statement of Facts in the NPA describes an extensive scheme in which multiple Southern Glazer’s executives and employees coordinated with alcohol beverage suppliers and third-party vendors to provide things of value to retail buyers at grocery store chains. These included cash payments, prepaid gift cards worth up to $1,000 each, luxury goods, golf trips, Super Bowl tickets, and other lavish benefits.

The NPA explains that this scheme was facilitated through a network of approved third-party vendors that submitted false invoices to Southern Glazer’s. The invoices were described as covering legitimate business expenses, such as “educational seminars,” or “planning meetings,” in an effort “to conceal the true nature of the expenditures.”

The improper conduct did not end in 2019 when Southern Glazer’s “took steps to mitigate known violations of trade practice regulations.” Southern Glazer’s sent letters to vendors stating that it would no longer process invoices for “incentives.” The NPA states that “[Southern Glazer’s] does not dispute that following the July 2019 letters, third-party vendors invoiced [Southern Glazer’s] suppliers directly for similar services…” The conduct persisted in some form through 2024.

Key Terms of the Non-Prosecution Agreement

The NPA reflects a negotiated resolution in which Southern Glazer’s will avoid criminal prosecution in return for compliance with substantial obligations, including the following:

• Monetary Payment: Southern Glazer’s has agreed to pay $12.5 million to the Treasury.
• Acceptance of Responsibility: Southern Glazer’s admitted to and accepted responsibility for the acts of its officers, directors, employees, and agents for conduct set forth in the Statement of Facts.
• Cooperation Obligations: Southern Glazer’s has agreed to fully cooperate with any prosecution of current or former employees and any other related criminal investigations during the 24-month term of the NPA.
• Tax Reporting: Southern Glazer’s agreed to work with the USAO to determine the amounts of improper compensation paid to current or former employees and to issue and report any required tax documentation, including Forms 1099.
• Corporate Compliance Agreement: The NPA includes a detailed Corporate Compliance Agreement that requires Southern Glazer’s to implement or enhance its compliance program to both prevent and detect trade practice violations.
• Annual Compliance Reporting: Southern Glazer’s is required to annually report to the USAO and the Alcohol and Tobacco Tax and Trade Bureau (TTB) regarding remediation and implementation of the compliance measures.

The Role of Third Parties

One of the most notable aspects of this resolution is the government’s emphasis on third-party accountability. The TTB’s assistant administrator stated in the USAO’s press release that “[t]his case serves as an important reminder that industry members are accountable for their own conduct, but also for the actions taken on their behalf by third party affiliates. Third parties, likewise, are responsible for any illegal activities they carry out on behalf of an industry member.”

The NPA makes clear that the scheme required third-party cooperation and emphasizes that industry members cannot outsource compliance obligations or risk by routing payments through vendors.

Considerations for Industry Members

This enforcement action should prompt all levels of the alcohol beverage industry, including distributors, suppliers, retailers, and third parties, to evaluate their trade practice compliance programs. Industry members should ensure that any compensation or incentive paid to employees, regardless of whether it flows through a supplier, vendor, or any other intermediary, is processed through their payroll and properly reported as income. Industry members must ensure that entertainment and gift practices involving retail buyers fall within the applicable dollar thresholds, approval requirements, and any documentation standards required under federal and state law. Industry members should also understand that internal compliance programs and policy changes alone are not sufficient to address regulatory violations — company compliance programs should include ongoing monitoring to ensure policies are implemented and followed by all employees and relevant beneficiaries. Industry members should consider the NPA when contemplating their trade practice compliance policies and employee-related training.

Conclusion

This matter represents a significant alcohol industry enforcement action that should be carefully considered by all industry members. The $12.5 million payment, along with substantial compliance obligations and an admission of responsibility, underscores the seriousness with which federal enforcement authorities are approaching trade practice violations. This matter also sends a pointed message to all third-party vendors as a reminder that facilitating or participating in improper payment schemes carries significant legal risk, regardless of who ultimately benefits.